Why at least 300,000 people in 33 states are losing unemployment benefits earlier than expected

• A tool to provide jobless aid to long-term unemployed people is broken in 33 states, a report said.

• The shutoff is affecting at least 300,000 people in at least 33 states, researchers said.

• The study said unemployment benefits for some claimants could turn off in New York and California.

• See more stories on Insider's business page.

A policy instrument designed as a buffer for unemployed Americans is broken in 33 states, said a new report released on Tuesday by the California Policy Lab.

The Extended Benefits program is meant to provide jobless aid to people who exhausted regular benefits in high-unemployment states. Earlier federal rescue packages that Congress approved lengthened the eligibility period for people to get the assistance.

But it appears the program is shutting off because it's not counting long-term unemployed people collecting emergency federal stimulus aid in a measurement used to gauge the share of the workforce claiming unemployment benefits.

"It's as if the Titanic had stopped loading the lifeboats because some people had already gotten off of the ship," T.J. Hedin, a coauthor of the study, tweeted on Tuesday.

"If these triggers were updated to count all people receiving unemployment benefits, then it would mean benefits would be available to impacted workers for longer durations, which seems sensible during times of extended job losses like the pandemic," Alex Bell, another coauthor of the study, said in a statement.

"Unfortunately, in state after state we see that the counter-intuitive design of the program's trigger system is causing the exact opposite to happen," he said.

Some states - such as Alabama, Maryland, Ohio, South Carolina, and Virginia - have experienced an early shutoff of the EB program, affecting around 20% to 30% of jobless claimants.

Researchers warned that some people's benefits could be yanked in California, New York, Massachusetts, Nevada, and New Mexico over the coming weeks. These states have over 30% of claimants receiving aid under the program, the report said.

A $300 weekly federal unemployment benefit is in place until September 6, a key part of President Joe Biden's recent stimulus law. Last week, unemployment claims dropped to a new pandemic-era low, as 576,000 people filed for benefits.

Some congressional Democrats are pressing to overhaul the nation's battered unemployment system. Sens. Ron Wyden and Michael Bennet unveiled a plan last week to beef up state unemployment checks and penalize states that stray from new benefit standards.

Read the original article on Business Insider